Critical Review: Dorman Products (DORM) versus Lydall (LDL)

Dorman Products (NYSE: LDL) and Lydall (NYSE:LDL) are both auto/tires/trucks companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, dividends, risk, profitability, valuation and earnings.

Risk and Volatility

Dorman Products has a beta of 1.04, suggesting that its stock price is 4% more volatile than the S&P 500. Comparatively, Lydall has a beta of 1.45, suggesting that its stock price is 45% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Dorman Products and Lydall, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dorman Products 0 4 0 1 2.40
Lydall 0 0 1 0 3.00

Dorman Products currently has a consensus target price of $68.33, indicating a potential downside of 17.46%. Lydall has a consensus target price of $53.00, indicating a potential upside of 30.06%. Given Lydall’s stronger consensus rating and higher possible upside, analysts plainly believe Lydall is more favorable than Dorman Products.

Earnings & Valuation

This table compares Dorman Products and Lydall’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dorman Products $903.22 million 3.04 $106.59 million $3.37 24.57
Lydall $698.44 million 1.01 $49.31 million $2.80 14.55

Dorman Products has higher revenue and earnings than Lydall. Lydall is trading at a lower price-to-earnings ratio than Dorman Products, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

78.6% of Dorman Products shares are owned by institutional investors. Comparatively, 91.3% of Lydall shares are owned by institutional investors. 11.9% of Dorman Products shares are owned by insiders. Comparatively, 4.4% of Lydall shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Dorman Products and Lydall’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dorman Products 12.42% 19.13% 16.04%
Lydall 6.20% 12.74% 7.94%

Summary

Dorman Products beats Lydall on 10 of the 15 factors compared between the two stocks.

Dorman Products Company Profile

Dorman Products, Inc. supplies automotive replacement parts, automotive hardware, and brake products to the automotive aftermarket and mass merchandise markets in the United States, Canada, Mexico, Europe, the Middle East, and Australia. It offers original equipment dealer products, such as intake manifolds, exhaust manifolds, window regulators, radiator fan assemblies, tire pressure monitor sensors, exhaust gas recirculation coolers, and complex electronics modules; fluid reservoirs, variable valve timing components, complex electronics, and integrated door lock actuators; and fasteners, including oil drain plugs, wheel bolts, and wheel lug nuts. The company also provides automotive replacement parts comprising door handles, keyless remotes and cases, and door hinge repairs; and heavy duty aftermarket parts for class 4-8 vehicles comprising lighting, cooling, engine management, and cab products. In addition, it offers solutions for rugged duty and fleet applications; replacement chassis part solutions; brake hardware products; electrical components; and application specific repair hardware products. The company provides its products under the OE Solutions, HELP!, HD Solutions, Premium Chassis, Premium XL, Premium RD, MAS, FirstStop, ConductTite, and AutoGrade brands through automotive aftermarket retailers, local independent parts wholesalers, national general merchandise chain retailers, mass merchants, salvage yards, and the parts distribution systems of parts manufacturers. Dorman Products, Inc. was founded in 1978 and is headquartered in Colmar, Pennsylvania.

Lydall Company Profile

Lydall, Inc. designs, manufactures, and markets specialty engineered filtration media, industrial thermal insulating solutions, and automotive thermal and acoustical barriers for filtration/separation and thermal/acoustical applications worldwide. It operates through Performance Materials, Technical Nonwovens, and Thermal Acoustical Solutions segments. The Performance Materials segment offers filtration media solutions for air, fluid power, and industrial applications, such as clean-space, commercial, HVAC, power generation, and industrial processes. This segment also provides non-woven veils, papers, mats, and specialty composites for the building products, appliances, and energy and industrial markets; and life sciences filtration products for biopharmaceutical pre-filtration and clarification, diagnostic and analytical testing, respiratory protection, water filtration, and high purity process filtration. The Technical Nonwovens segment offers nonwoven rolled-good felt media and filter bags used primarily in industrial air and liquid filtration applications. The Thermal Acoustical Solutions segment provides engineered products for the transportation sector to thermally shield sensitive components from high heat, improve exhaust gas treatment, and lower harmful emissions, as well as assist in the reduction of powertrain and road noise. Its products are used in the tunnel, fuel tank, rear muffler, and spare tire applications, as well as outer dash, powertrain, catalytic converter, turbo charger, and manifolds of cars, trucks, SUVs, heavy duty trucks, and recreational vehicles. This segment also offers thermal and acoustical insulating solutions comprising organic and inorganic fiber composites for the automotive and truck markets. The company markets its products to original equipment manufacturers and tier-one suppliers through internal sales force and distribution network. Lydall, Inc. was founded in 1879 and is headquartered in Manchester, Connecticut.

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